MINISTRY OF FINANCE ACADEMY OF FINANCE -------------------- NGUYEN HONG HANH CQ57/22.04CL GRADUATION THESIS TOPIC: COMPLETING THE PROCESS OF AUDITING THE ITEMS OF SELLING EXPENSES AND ADMINISTRATIVE EXPENSES IN THE AUDIT OF FINANCIAL STATEMENTS PERFORMED BY AZ VIET NAM AUDITING AND VALUATION COMPANY LIMITED Major : Auditing Code : 22 CLC Instructors : Assoc.D Thinh Van Vinh Ph.D Dang Thi Huong Hanoi – 2022 Academy of Finance Graduation Thesis DECLARATION I assure that this is my own research project. The results in this thesis come from the actual situation of AZ Vietnam Auditing and Valuating Company Limited. Internship student Nguyen Hong Hanh Nguyen Hong Hanh i CQ57/22.04CL Academy of Finance Graduation Thesis TABLE OF CONTENT INTRODUCTION. General overview of the items of selling and administrative expenses in the audit of financial statements.1 Concept of selling and administrative expenses .2 Characteristics of selling and administrative expenses .3 Internal control over selling and administrative expenses .4 The influence of selling and administrative expenses on the audit of financial statements.
Overview of the audit of selling and administrative expenses in the audit of financial statements. Objectives of audit of Selling and Administrative expenses. Basis for auditing the items of Selling and Administrative expenses. Common mistakes in auditing the items of Selling expenses and Administration expenses.
Survey of internal control Selling and Administrative expenses in the audit of financial statements. General process of auditing the items of selling and administrative expenses in the audit of financial statements. Audit planning phase. Audit implementing phase.
Audit completing phase. General overview of AZ Vietnam Auditing and Valuation Co. History of establishment and development of AZ Vietnam Auditing and Valuation Co. 25 Nguyen Hong Hanh ii CQ57/22.04CL Academy of Finance Graduation Thesis 2.
Organization of AZ Vietnam Auditing and Valuation Co. Characteristics of organizational auditing to financial accounting at AZ Vietnam Auditing and Valuation Co. Characteristics of the audit team. Organizational characteristics of audit files.
Characteristics of audit quality control process. General process of auditing financial statements at AZ Vietnam Auditing and Valuation Co. Current status of audit process Selling and administrative expenses performed by AZ Vietnam Auditing and Valuation Co. Introduction about the audit of ABC’s financial statement.
Current status of audit process of selling and adminitrative expenses. Status of the audit plainning stage .2 Status of the audit perfoming phase. Status of the audit completing phase. General assessment of the current status of the audit process of Selling and Administrative expenses in the audit of financial statements performed by AZ Vietnam Auditing and Valuation Co.
Cause of the limitations. Development orientation and the need to complete the audit process of selling and administrative expenses. Development orientation of AZ Vietnam Auditing and Valuation Co. Necessity to complete the process of auditing the items of selling expenses and administrative expenses.
Principles and requirements for completing the audit process for items of selling and administrative expenses. Principles for completing the audit process for items of selling expenses and administrative expenses. Requirements for completing the audit process for items of selling expenses and administrative expenses. 72 Nguyen Hong Hanh iii CQ57/22.04CL Academy of Finance Graduation Thesis 3.
Solutions to complete the process of auditing selling and administrative expenses. Completing the audit planning phase. Completing the audit implementing phase. Completing the audit completing phase.
Some other solutions. Conditions for implementing solutions to complete the audit of selling and administrative expenses. On the side of state agencies. On the side of the professional association.
Auditor and AZ Vietnam Auditing and Valuation Co. On the side of audited entity. On the side of universities and training institutions. 81 LIST OF REFERENCES.
82 Nguyen Hong Hanh iv CQ57/22.04CL Academy of Finance Graduation Thesis LIST OF DIAGRAM, CHART Diagram 2. Organization chart of A-Z Vietnam Auditing and Valuation Co.2: Quality control systems……………………………………………….3: General process of auditing financial statements………………………34 LIST OF TABLE Table 1.1 Audit procedures to obtain audit objectives relating to selling expenses and administrative expenses……………………………………………………………….1 The fiancial position of the company in the period of 2019-2021……….2 The company's business results in the period of 2019 – 2021…………….3 Functional tasks in organizational structure.4 Audit quality review step at AZ Vietnam Auditing and Valuation Company Limitted……………………………………………………………………………….5: Arrangement of audit staff at Client ABC.6: Summary of audit results of Selling and Adminitrative expenses.63 LIST OF WORKING PAPERS Working paper A310………………………………………………….47 Nguyen Hong Hanh v CQ57/22.04CL Academy of Finance Graduation Thesis INTRODUCTION 1. The urgency of the topic In the context of global and regional economic integration, Vietnam is making great changes. The size of the economy, the number of businesses, forms and fields of operation are expanding, but it is also a challenge with the transparency and soundness of financial information.
Therefore, the role and position of auditing in general and auditing financial statements in particular are increasingly strengthened in checking, evaluating and confirming the reliability of economic and financial information, contributing significantly to arrangement and innovation activities, equitization of enterprises and attracting foreign investment activities, supporting state management, creating favorable conditions for the country's economic development. During the years of operation, A-Z Vietnam Auditing and Valuation Co. has been gradually asserting its position in the market. One of the important factors contributing to the success of the Company in recent years is the effective application of audit methods and processes to the actual audit of items on financial statements at customers.
Among the items on the financial statements, the item of selling expenses and administrative expenses is one of the items that need to be checked in detail. Because it is a regular expense that is incurred and is related to many other factors such as money, fixed assets, salary,. and is a constitutive factor in the consumption cost of products and goods or services, often posing a risk to the determination of taxable income on an enterprise's income statement. In order to effectively audit this item, AZ Vietnam Auditing and Valuation Co.
has developed a strict audit process from audit planning to the end of the audit and finally audit quality control. But also, there are still certain limitations in the audit process of selling expenses and administrative expenses at the Company. This leads to an inaccurate view of the trend of fluctuations in financial indicators at the customer unit, increasing the risk of errors in the audit process. Therefore, it is necessary to have solutions to overcome the limitations in the audit process of selling expenses and administrative expenses at the Company.
After a period of internship at AZ Vietnam Auditing and Valuation Company Limited, in reality, I learned and realized the importance of the above issue, with the help of the Company Auditting Department and instructor of Assoc. Thinh Nguyen Hong Hanh 1 CQ57/22.04CL Academy of Finance Graduation Thesis Van Vinh and Ph. Dang Thi Huong, I decided to choose the topic of "Complete the process of auditing Selling Expenses and Administrative Expenses in the audit of financial statements performed by A-Z Vietnam Auditing and Valuation Company Limited" for my graduation thesis. The purposes of the dissertation - Researching the fundamental theories behind the independent auditor's audit procedure for the line items "selling expenditures" and "administration expenses." - Clarifying the current position of A-Z Vietnam Auditing and Valuation Co.'s audit of the financial statements' selling costs and administrative costs and also pointing out the advantages and disadvantages and the reasons why the situation exists clear.
- Scientifically recommending improvements to the audit process for the line items "selling expenditures" and "administration expenses" suitable for unique features of this business will also help it applicable for other businesses in the present economy. Subjects and scope of study - Subjects of study: Research topic on the process of auditing items item selling expenses and administrative expenses in auditing financial statements. - Scope of research: The research topic includes the following areas: + Scope of content: The application of the audit process of items such as selling expenses and administrative costs in the financial statements audited by AZ Vietnam Auditing and Valuation Co. in the period of 2021 – 2022.
+ Scope of space: The issues studied at AZ Vietnam Auditing and Valuation Co. + Scope of time: Documents and data on the audit process of items of selling expenses and administrative expenses conducted by AZ Vietnam Auditing and Valuation Co. are collected in the period of 2021 – 2022. The proposed solutions are implemented from 2023 to 2030.
Research Methodology The topic uses a combination of research methods including: General methodology: dialectical materialism method Specific methods include: theoretical research, fieldwork, interviews, statistical data, analysis, comparison as follow: Nguyen Hong Hanh 2 CQ57/22.04CL Academy of Finance Graduation Thesis - Collection of primary documents: I asked and consulted directly with the auditting and other employees in the company. In addition, I explore research issues through consulting with instructors. - Collection of secondary documents: I conducted research theoretical issues through reference textbooks, articles, magazines, academic paper, etc. I also collected secondary documents on the situation by observing methods, studying documents, audit standards, Academy of Finance Graduation Thesis statements of the company.
Information could also be collected via the media and other documents. - Summarizing and processing data as evidence for the research results: using descriptive statistical methods, qualitative or quantitative analysis and comparison between the reality and theoretical basis of accounting regime to present research results. Structure of the dissertation In addition to the Introduction, conclusion, appendix, reference, structure. The graduation thesis course consists of 3 chapters: Chapter 1: Basic theoretical on audit process of selling expenses and administrative expenses in audit of financial statements performed by independent audit.
Chapter 2: Current status of auditing process of selling expenses and administrative expenses in audit of financial statements implemented by A-Z Vietnam Auditing and Valuation Company Limited. Chapter 3: Solutions to complete the audit process of selling expenses and administrative expenses in auditing financial statements implemented by A-Z Vietnam Auditing and Valuation Company Limited. Nguyen Hong Hanh 3 CQ57/22.04CL Academy of Finance Graduation Thesis CHAPTER 1. BASIC THEORETICAL ON AUDIT PROCESS OF SELLING EXPENSES AND ADMINISTRATIVE EXPENSES IN AUDIT OF FINANCIAL STATEMENTS PERFORMED BY INDEPENDENT AUDIT 1.
General overview of the items of selling and administrative expenses in the audit of financial statements.1 Concept of selling and administrative expenses There are three kinds of expense that make up a company’s operating expenses including administrative expenses, selling expenses and general expenses. Selling expenses A selling expense is a cost incurred to promote and market products to customers. These costs can include anything from advertising campaigns and store displays to delivering goods to customers. Any expense that is associated with selling a good or making a sale is considered a selling expense.
Selling expenses are part of the operating expenses (along with administrative expenses). Selling expenses include sales commissions, advertising, promotional materials distributed, rent of the sales showroom, rent of the sales offices, salaries and fringe benefits of sales personnel, utilities and telephone usage in the sales department, etc. Under the accrual basis of accounting, selling expenses appear on the income statement in the period in which they occurred (not the period in which they were paid). Administrative expenses Administrative expenses are part of the operating expenses (along with selling expenses).
Administrative expenses include expenses associated with the general administration of the business. Examples include the salaries and fringe benefits of the company president, human resource personnel, accounting, information technology, the depreciation expense for equipment and space used in administration, as well as supplies, utilities, etc. Administrative expenses are costs that contribute to the overall operations of the company and can’t really be directly related back to selling or making sales. These expenses include things like overhead, management salaries, accounting fees, and other expenses used to run the business.
Nguyen Hong Hanh 4 CQ57/22.04CL Academy of Finance Graduation Thesis 1.